India: Kerala Government’s Pragmatic Industrial Policy

In short, what the Tamil Nadu government could not do, the Kerala government did. The pipeline project was inaugurated by the Prime Minister sometime back.

5 mins read
A representational image [ Economic Times]

Not long ago,  industrial scene in Kerala was marked by labour unrest, confrontation, strike, violence, gherao  and even occasionally murder. The situation was so disturbing that some units like Gwalior Rayon in Mavoor had to be closed down and another important unit Benani Zinc in Ernakulam was permanently closed.

In such circumstances, the project promoters and investors were very apprehensive about setting up or investing in industrial projects in Kerala.  However, in recent years, there is not any big negative news about industrial unrest in Kerala in similar fashion as it existed earlier and it is rare these days.  Certainly, the confidence level of investors in starting ventures in Kerala has visibly improved. 

Many observers wonder as to what could be the reason for such an impressive transformation for better in Kerala. 

There is a view that around eight years back, marxist communist party and other communist party were in the opposition and CITU and other communist unions affiliated to  these political parties often created unrest and indulged in prolonged strike “to settle scores ” with the management.  At that time, industrial relations were seen by these unions in terms of class conflict and they believed in need for struggle by  the labour to get what they wanted.   With the marxists now being in power in Kerala for the past several years, the “lawbreakers”  becoming lawmakers could also be the reason for the peace in the industrial front in the state.

However, there is also a more charitable view that the industrial climate in Kerala has improved,  since industrial managements are now more accommodative and labour and unions have also realized that the working class lose more than what they gain by indulging in strikes and forcing closure of units.

In any case, it is now crystal clear that the ruling marxist party in Kerala has become more pragmatic in ensuring a  peaceful industrial climate and in targeting to achieve industrial growth, realising that this is the only way to promote employment and improve the state’s economy. 

This is a welcome sign and a few examples clearly prove this pragmatism.

LNG terminal in Kochi :

 LNG terminal of capacity 5 million tonne per annum for importing natural gas was set up in Kochi with several crore of rupees of investment by a private company.

However, this project suffered enormously in the beginning with low capacity utilization and incurring loss,  as the gas pipeline project for transferring gas to the user industries could not be implemented due to protests and agitation against the pipeline project. The original plan was to use the gas in Kerala and  also take the gas to Tamil Nadu and Karnataka to the end user industries.

There was objection to the pipeline project in Tamil Nadu and  the Tamil Nadu government totally failed to ensure implementation of the pipeline project in Tamil Nadu. Similarly, there ware also initial protests in Kerala , which prevented the implementation of  the pipeline project towards Karnataka.

However, the marxist government tackled this issue in a very pragmatic way by convincing the trade unions about the importance of this project  and ensured the completion of the pipeline project to Karnataka from Kerala and thus saved the Kochi LNG terminal project from collapse.

In short, what the Tamil Nadu government could not do, the Kerala government did. The pipeline project was inaugurated by the Prime Minister sometime back.

Revival of Hindustan News Print Limited :

When the central government had kept   Hindustan Newsprint Limited  at Velloor in Kerala   for sale  along with other central public sector units (CPSUs),  the marxist party ruled government   took over the unit  from central government in 2019  by paying Rs.146 crore  . After the takeover by the Kerala government, the company stopped production  due to heavy losses.  After three years, the state government has now come with the revival  plan of the acquired company  and has commissioned the plant recently.  In the process,it has solved the labour issues amicably , ensuring peace that is necessary to revive the unit to achieve profitable  operation.

This is a remarkable initiative of the state government , showing it’s pragmatic approach to industrial   development in Kerala.

Vizhinjam port :

Rs.17500 crore Vizhinjam international sea port being built by Adani group
 is facing issues now due to agitation against the project by a section of fishermen and the agitation actively supported and led by Christian missionaries.  

The protest movement  resulted in violence  recently.

There is a general view earlier  that marxist communists are firmly against the industrial groups such as Adani and Ambani , accusing them of being “capitalist dragons”

However, marxist led Kerala government has changed it’s view on Adani group and entrusted this massive Vizhinjam project to Adani group for implementation.  Around a decade back , nobody could even visualize marxist communists entertaining Adani group to invest in Kerala.

This is a clear example to show the pragmatic policy of marxist led Kerala government towards the industrialization of the state.

 Kerala government has clearly and emphatically highlighted the industrial and economic importance of the port project and explained how it would benefit Kerala immensely.  Kerala government has clearly and explicitly expressed it’s resolve firmly to implement this project and rejected the demand of the agitators.  Kerala government has not succumbed to the pressure from the “working class”.

What is particularly more significant is that when Adani group wanted that the central government forces should be sent to Vizhinjam port area to protect the engineers and workers and the project from the agitators, the Kerala government simply said that it would have no objection for central government forces to be deployed.  It did  not make it a prestige issue.

Siverline project :

Kerala government proposes to implement  529.45-km railway line  to link Thiruvananthapuram in the south to Kasaragod in the north, covering 11 districts through 11 stations within four hours, at a speed of 200 km  per hour .

Several  political parties in Kerala have opposed this project on various grounds. However, Kerala government has insisted that a holistic view of the project should be taken based on cost benefit analysis and pointed out several merits of the project and expressed it’s determination to implement the project.  Recently, Kerala government confirmed that   the central government has given permission for this project.

Such approach of the marxist party in power in Kerala is a far cry from it’s earlier stand on various issues that upset several project schemes in the state.

Need for more similar pragmatism in the coming years :

Kerala has enormous advantages in setting up industrial projects in several fields which need urgent attention from  the government.

Just one example.

Kerala is the only producer of rutile grade titanium dioxide in India with the production level of around 30000 tonne per annum. Kerala has plentiful  reserves of ilmenite , which is the  raw material for producing titanium dioxide pigment. India  imports more than 2 lakh tonne per annum of titanium dioxide  at present.

There is a glorious opportunity for Kerala government to exhibit it’s quality of pragmatism by setting up  large titanium dioxide project in the state with international participation.  Obviously, to set up large titanium dioxide project of capacity not less than one lakh tonne per annum, involving investment of around Rs.1000 crore ,  technical collaboration from well-established international companies are required.

In view of the strategic importance of the project, the prospective overseas collaborators are bound to ask for controlling equity participation in the project.  Kerala government should meet the demands of the overseas collaborators and quickly go ahead with implementation of the plans of this much needed project in Kerala.

If necessary, the Kerala government should not hesitate to give majority equity share to the overseas collaborators in the existing titanium dioxide unit Kerala Minerals and Metals Ltd.,where  presently Kerala government own around 100 percent equity share.

Many more investment opportunities exist in the state and the present pragmatic approach of the Kerala government give hope for future industrialisation of Kerala.


N. S. Venkataraman is a trustee with the "Nandini Voice for the Deprived," a not-for-profit organization that aims to highlight the problems of downtrodden and deprived people and support their cause and to promote probity and ethical values in private and public life and to deliberate on socio-economic issues in a dispassionate and objective manner.

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